Andrea, This is SO important. It's one of the first things I ask folks in an initial interview for their mortgage. "Have you determined what a comfortable mortgage payment will be?" What one qualifies for and what is comfortable can be two VERY different numbers.

When folks come back to me with "more house", I always take them back to that initial conversation!

There is great budget information at www.gailvazoxlade.com. Too many folks forget about the higher utility bills, repairs, updates, and silly things like FOOD and furniture or even moving costs when calculating what they will need to spend when buying a home!

This is really important for folks to take to heart when searching for their first home or their last! I am re-blogging!!

Maryland Mortgage Mama

Buying your Maryland home - loan approval vs. comfort levelReflecting back on the precrash market, buyers were a lot different than today. Back in those days it seemed to be less about finding a home than just a house. It was the nature of the beast. We all started with the best of intentions, hunting for the home of our dreams. However, writing offer after offer, competing against 10, 15 other buyers took its toll.

'Lets just finally get something, we will figure out how to make ends meet later or how to turn it into a home.' Expectations were lowered, purchase price escalation clauses added, big compromises were made and in many cases buyers opted to go above and beyond their comfort range. [the role predatory lending played in all of this is another topic]

I admit that I struggled with some of my clients' decisions. I did not - and do not - want anybody to feel like they have to settle for just something but I also advise against going out of your comfort range. Your comfort level can be a whole lot different than your loan approval and it's important to take a close look at both.

You may qualify for a monthly payment of $2,000 but may feel like $1,800 is the most you can afford to keep your current lifestyle. Which one would you rather do - go to your max and cut back on the things you enjoy or keep on living the way you do and lower your house-buying budget? Cutting back on dinners or vacations may be worth it to some but not to others. Your comfort level is very personal but it should be an appropriate one and enable you to be financially healthy.

There can be many reasons why your comfort level may be lower than your loan approval. You may have a special savings account you contribute to monthly which is money you shouldn't calculate with. Or how about the $100/month you pay for your child's drama club or gymnastics?

If the payment you are comfortable with is lower, you may have to make compromises somewhere else - without having to settle hopefully. You may not get everything on your wish list or the location you've dreamed about - but in the end opting for a three vs. a four bedroom home for example may be worth staying within your comfort range.

My advice: before you start house-hunting, get out your budget and figure out how much money you are truly comfortable with spending on your monthly payment - don't forget utilities and a little cushion for home repairs/improvement!

Andrea is a proud military spouse, mom of two beautiful little girls, hobby decorator and a Realtor® based in Silver Spring, MD. Andrea focuses on Montgomery County and Howard County Real Estate, she enjoys everything beautiful in life and always answers the phone with a smile.

All photographs are my own and I'd like to keep it that way. All information is deemed reliable but not guaranteed.

Comments

Thank you so much for this post. My daughter and her husband have just gone through this. They passed on one house that was a nice home at a great price, but the utility bills would have been out of sight!